1. Macroprudentialism: The Governance Challenges
Donato Masciandaro

2. Macroprudentialism: What Do We Know
One Industry (Finance) Two + One Economic Policies:
Traditional Policies: Monetary Policy (MP) and Microprudentialism (MICROPRU)
Monetary Policy: Monetary Stability, MP tools (interest rates and quantitative operations) and MP strategy (mix rules/discretion)
Microprudentialism: Banking Stability, MICROPRU tools (capital ratios) and MICRO strategy (mix rules/discretion)
Which Institutions? Two Stages …

3. Traditional View: Two Policies, One Player

4. Modern View (Before the Crisis): Two Policies, Two Players

5. Modern View (Before the Crisis): Two Policies, Two Players

6. Post Modern View (After the Crisis): The Great Reversal

7. Macroprudentialism: What Do We Know
New Toolkit in Macroeconomics: Macroprudentialism (MACROPRU)
One Goal: Financial Stability (Systemic Risk)
One Toolkit (LTV ratios, countercyclical buffers)
One Specific Strategy: Mix Rules/Discretion

8. Macroprudentialism: What Do We Not Know
The interactions between MP, MACROPRU and MICROPRU, can be:
A) positive and/or negative, driven by
B) economics and political economy, and characterized by
C) exogenous and endogenous shocks
Therefore, which institutional setting?

9. Macroprudentialism: Governance Principles
Four Principles:
1) Three Goals, Three Players
2) Three Players, One Information Set
3) For Each Player: Same Levels of Independence and Accountability
4) Rules of the Games on Interactions:
a) Normal Times: Nash Equilibria
b) Extraordinary Times (Goal Conflicts): Political device to decides the Goal Hierarchy

10. Macroprudentialism: Governance in the Real World
Governance = political drivers
Who is the Macro Supervisor (Masciandaro and Volpicella 2014, 31 countries)?
1) No autonomous players, just committees
2) Dominant Player: It is likely to be the Central Banker , the more he/she is also the Micro Supervisor (information gains) and …
3) the more he/she is Dependent (avoiding too powerful bureaucracies)